In an input market,economic rent is defined as the:
A)total remuneration paid to a factor of production.
B)minimum amount required to retain a factor of production in its present use.
C)total cost for a firm of renting land,equipment,and buildings.
D)extent to which payments to a factor of production exceed the minimum amount required to retain it in its present use.

Question

Quizplus · Accepted Answer

Economic rent is the excess payment made to a factor of production over and above the minimum amount required to retain it in its current use. It arises due to scarcity and differential productivity of factors of production. Therefore, option D is the correct choice. Option A refers to total remuneration paid to a factor of production, which includes normal profits as well. Option B refers to the opportunity cost of using a factor of production in its next best alternative use. Option C refers to the total cost of renting various factors of production.

In an Input Market,economic Rent Is Defined as The